Press Release

Form 10QSB/A for CREATIVE VISTAS INC

December 23, 2005

Quarterly Report

Item 2. Management's Discussion And Analysis or Plan of Operation
(Unaudited)
The following discussion of the financial condition and results of operations should be read in conjunction with the consolidated financial statements and related notes thereto. The following discussion contains certain forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those discussed therein. Factors that could cause or contribute to such differences include, but are not limited to, risks and uncertainties related to the need for additional funds, the rapid growth of the operations and our ability to operate profitably a number of new projects. Except as required by law, we do not intend to publicly release the results of any revisions to those forward-looking statements that may be made to reflect any future events or circumstances.

No financial statements are presented for the shell company, Creative Vistas, Inc., prior to the business acquisition and leveraged buyout transactions because, prior to the September 30, 2004 transactions, its assets and results were immaterial. Prior to September 30, 2004, Creative Vistas refers to the shell company. The term the Company refers to the post business acquisition and leveraged buyout consolidated entity.

Overview and Recent Developments

On December 3, 2004, the Company announced that AC Technical was awarded approximately $648,000 in orders for new security projects, providing access control and CCTV equipment plus installation and related services in three projects for the Canadian Government.

In the private sector, on December 20, 2004, the Company announced that AC Technical had been awarded approximately $607,500 in orders for security-related equipment and services for a Canadian regional healthcare facility.

On January 5, 2005, the Company announced that AC Technical was awarded orders for approximately $365,500 in security projects for a Canadian retailer.

On January 12, 2005, the Company announced that AC Technical entered into a letter of intent to acquire the privately-held dataBahn, Inc. dataBahn is based in Farmers Branch, Texas, and provides solutions to connect consumers and commercial users by providing satellite-based internet, voice and data services to the emerging broadband mobile communications markets. The acquisition is subject, among other things, to due diligence and the negotiation of definitive documentation. In furtherance of this acquisition, on March 9, 2005, the Company made a two-year secured loan to dataBahn in the amount of $125,000 and agreed to lend dataBahn an additional $125,000.

On February 1, 2005, the Company announced that AC Technical was awarded additional orders worth approximately $178,200 in security projects for a Canadian retailer.

On February 7, 2005, the Company announced that AC Technical was awarded orders for over $324,000 in security projects for the Canadian Government.

On February 11, 2005, the Company announced that AC Technical was selected by BMW to implement a security project to provide the automotive manufacturer with advanced digital video surveillance equipment, plus integration and related services designed to ensure the security of BMWs locations in Canada. The project is expected to be completed during the first half of 2005.

On March 11, 2005 the Company announced that AC Technical was awarded approximately $810,000 in orders for security projects by the Canadian Government, and companies in the education, medical and healthcare markets. On March 24, 2005 the Company announced that AC Technical was awarded approximately $1,377,000 in additional orders for security projects by the Canadian Government, and companies in the education, medical and healthcare markets.

On April 1, 2005 the Company announced that AC Technical received a grant from Canadas Industrial Research Assistance Program.

On June 2, 2005 the Company announced that A.C. Technical Systems, Ltd. was awarded approximately $803,900 million in orders for security and surveillance projects by the Canadian Government, and companies in the commercial property management and education markets.

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Results of Operations
Comparison of Three Months Period Ended September 30, 2005 to Period Ended September 30, 2004
Since our business tends to be seasonal, most of the jobs are usually processed by us in the first or the fourth quarter of the calendar year. For example, the Canadian federal government has a March year end, and as a result, we experience an increase in government contracts in the first quarter of the calendar year.

For purposes of this Managements Discussion and Analysis or Plan of Operation, we compared the third quarter ended September 30, 2005 to the comparable period in 2004, which relates to the successor period of the day September 30, 2004 together with the predecessor period from July 1, 2004 to September 29, 2004 to reflect the entire three months period ended September 30, 2004. The business of AC Technical was acquired in a leveraged buyout on September 30, 2004. Prior to the September 30, 2004 Creative Vistas, Inc. had no material assets or results.

Sales: Sales for the quarter ended September 30, 2005 decreased 18% to $1,866,000 from $2,264,276 for the quarter ended September 30, 2004. Contract revenue decreased $427,000, or 22% compared to the third quarter of 2004. The decrease was directly related to the delay of some construction sites. Service revenue increased 6% to $299,000 for the third quarter of fiscal 2005 from $282,000 for the same period of fiscal 2004. Service revenue primarily represents the cumulative effect of the growth in contracts and number of customers over the past few years. We have experienced a significant increase in the number of inquiries for systems from the government and retail sector. This increased interest in security products and services may result in our achieving increased revenues in future periods if we are successful in attracting new customers or obtaining additional projects from existing customers. There is no assurance that the Company will be able to attract new customers.

Cost of Goods Sold: Cost of goods sold as a percentage of revenue for the three months ended September 30, 2005 was 1,187,500 or 64% of revenues compared to 1,884,700 or 83% of revenues for the three month period ended September 30, 2004. The material cost was $811,000 or 43.5% of the revenue for the three months ended September 30, 2005 compared to $1,391,700 or 61.5% of revenues in the same period of fiscal 2004. Last year percentage in material cost was higher mainly due to our charging lower rates to compete in an increasely competitive market. However, the Company intended to sell the contract with higher gross margin in third quarter of 2005. Additionally, there was written off of inventory approximately $100,000 in 2004. As a result, the gross margin was lower for the period ended of September 30, 2004. On the other hand, the labor and subcontractor cost decreased to $366,000 or 19.6% of revenues for the three months ended September 30, 2005 from $467,000 or 20.6% of revenues for fiscal 2004. The decrease in balance was mainly due to the decrease in contract revenue.

Project, Selling, General and Administrative Expenses: Projects, selling, general and administrative expenses for the quarter ended September 30, 2005 was $977,700 or 52.4% of revenues for the quarter ended September 30, 2005 compared to $1,235,000 or 54.5% of revenues for the same period of fiscal 2004. The balance is mainly comprised of the following:

Project cost was $329,700 or 17.7% of revenue for the quarter ended September 30, 2005 compared to $358,700 or 15.8% for the same period of fiscal year 2004. Balance mainly includes the salaries and benefits of indirect staff amounting to $163,000 in the third quarter of fiscal 2005 compared to $143,000 for the same period of fiscal 2004. The decrease was mainly due to the decrease in number of headcount. Leasing cost of the automobile was approximately $42,000 for the quarter ended September 30, 2005 compared to $62,000 for the same period of fiscal 2004. The decrease was mainly due to the decrease in number of vehicles used by the Company. Travel and gas expenses were $44,000 for the quarter ended September 30, 2005 compared to $26,000 for the same period of fiscal 2004. The increase was mainly due to the increase in travel by the staff. The consulting fees decreased to $11,000 for the quarter ended September 30, 2005 from $66,000 for the same quarter ended September 30, 2004. There were consulting fees for the services provided by a Company related to the chief executive officer of
A.C. Technical Systems Ltd in 2004. The consulting services were on a monthly basis and were not pursuant to a written agreement. There was no such expense after the business acquisition and leveraged buyout transactions.

Selling expenses were $206,300 or 11.1% of revenues for the quarter ended September 30, 2005 compared to $237,600 or 10.5% of revenues for the third quarter of fiscal 2004. Balance for the three months period ended September 30, 2005 is mainly comprised of salaries, commission and consulting fees to salespersons and the president of $162,700 compared to $195,700 for the same period of fiscal 2004. Decrease in the balance was mainly due to the decrease in number of salespersons from 8 as at September 30, 2004 to 5 as at September 30, 2005. The advertising and promotion expenses were 16,500 for the quarter ended September 30, 2005 compared to $24,000 for the third quarter of fiscal 2004. There was no material fluctuation for both quarters ended September 30, 2004 and 2005.

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General and administrative cost was $441,700 or 23.6% of revenues for the quarter ended September 30, 2005 compared to $638,700 or 28.2% for fiscal 2004. The balance for the three month period ended September 30, 2005 is comprised mainly of salaries and benefits to administrative staff of $127,500 compared to $143,000 for the quarter ended September 30, 2004. The increase in balance was mainly due to the decrease in headcount. The professional fees, investor relations and investment banking fees were $103,000 for the quarter ended September 30, 2005 compared to $256,000 for the same period of fiscal 2004. The balance for the third quarter of fiscal 2004 was mainly due to the business acquisition and leverage buyout transaction happened on September 30, 2004
Operating Income/Loss: The Company has a higher gross margin of 36% for the quarter ended September 30, 2005 compared to 17% for the same quarter of fiscal year 2004. The increase in gross margin was mainly due to the fact that the Company sold contracts with higher gross margin in the last few months. Our losses were mainly due to the large professional fees for the registration statements and the quarterly report and investor relations expenses in the amount of $103,000 for the quarter ended September 30, 2005 and $256,000 for the quarter ended September 30, 2004.

Interest and Other Expenses or income: Net loss from Interest and other expenses for the quarter ended September 30, 2005 were $292,400 or 15% of revenues compared to $8,000 or 1% of the revenues for the same quarter of fiscal 2004. The balance for the current period is primarily comprised of the amortization of deferred charges amounting to $110,000. In addition, total interest on the convertible term notes and other notes payable was $100,000 for the three month period ended September 30, 2005 and there was no such interest for the same period of fiscal year 2004.

Income taxes: No income tax provision for the period ended September 30, 2005 which was mainly due to the Companys losses for the period. All prior taxes have already been accounted for in the income tax recoverable and therefore, there is no additional provision for income taxes recoverable and deferred tax asset.

Net Income/Loss: Net loss for the quarter ended September 30, 2005 was $592,000 compared to net loss of $863,000 for the three month period ended September 30, 2004. The net loss for the three months ended September 30, 2005 was attributed to the amortization of deferred charges amounting $111,000. In addition, net loss increased because of the professional and investor relations expenses incurred due to public company expenses and the additional interest and penalty expenses on long term debts.

Results of Operations
Comparison of nine month Period Ended September 30, 2005 to Period Ended September 30, 2004

For purposes of this Managements Discussion and Analysis or Plan of Operation, we compared the nine month period ended September 30, 2005 to the comparable period in 2004, which relates to the successor period of the day September 30, 2004 together with the predecessor period from July 1, 2004 to September 29, 2004 to reflect the entire nine months period ended September 30, 2004. The business of AC Technical was acquired in a leveraged buyout on September 30, 2004. Prior to the September 30, 2004 Creative Vistas, Inc. had no material assets or results.

Sales: Sales for the nine month period ended September 30, 2005 increased 16% to $7,003,000 from $6,052,000 for the nine month period ended September 30, 2004. Contract revenue increased $880,000, or 17% compared to the nine month period ended September 30, 2004. The increase was mainly due to an increase in the number of contract in the first nine months of 2005. The increase resulted from the Company winning a greater percentage of contract bids. Service revenue increased 7.1% to $839,000 for the nine month period ended 2005 from $783,000 for the same period of fiscal 2004. Service revenue primarily represents the cumulative effect of the growth in contracts and number of customers over the past few years. We have experienced a significant increase in the number of inquiries for systems from the government and retail sector. This increased interest in security products and services may result in our achieving increased revenues in future periods if we are successful in attracting new customers or obtaining additional projects from existing customers. There is no assurance that the Company will be able to attract new customers.

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Cost of Goods Sold: Cost of goods sold as a percentage of revenue for the nine month period ended September 30, 2005 was 4,921,600 or 70.3% of revenues compared to 4,108,500 or 67.9% of revenues for the nine month period ended September 30, 2004. The material cost was $3,372,500 or 48.1% of the revenue for the nine month ended September 30, 2005 compared to $2,708,500 or 44.7% of revenues in the same period of fiscal 2004. The percentage increase in material cost was mainly due to our charging lower rates to compete in an increasingly competitive market. However, the Company intended to sell the contracts with higher gross margin. As a result, our gross margin decreased. On the other hand, the labor and subcontractor cost increased to $1,453,000 or 20.7% of revenues for the nine month ended September 30, 2005 and $1,331,200 or 21.9% of revenues for fiscal 2004. The increase in balance was mainly due to the increase in contract revenue.
Project, Selling, General and Administrative Expenses: Projects, selling, general and administrative expenses for the nine month ended September 30, 2005 was $3,141,100 or 44.8% of revenues for the nine month period ended September 30, 2005 compared to $3,135,400 or 51.8% of revenues for the same period of fiscal 2004. The balance is mainly comprised of the following:

Project cost was $1,015,800 or 14.5% of revenue for the quarter ended September 30, 2005 compared to $1,087,700 or 17.9% for the same period of fiscal year 2004. Balance mainly includes the salaries and benefits of indirect staff amounted to $510,800 in the nine month period ended 2005 compared to $623,000 for the same period of fiscal 2004. The decrease was mainly due to the decrease in number of headcount. The automobile insurance expenses were approximately $50,000 for the nine month period ended September 30, 2005 compared to $51,000 for the same period of fiscal 2004. The leasing costs for Company automobiles of approximately $134,000 for the quarter ended September 30, 2005 compared to $167,000 for the same period of fiscal 2004. The decrease was mainly due to the decrease in number of vehicles used by the Company. Travel and gas expenses were $165,000 for the nine month period ended September 30, 2005 compared to $129,000 for the same period of fiscal 2004. The increase was mainly due to more travel by the staff.

Selling expenses were $627,600 or 8.9% of revenues for the nine month period ended September 30, 2005 compared to $733,000 or 12% of revenues for the nine month period of fiscal 2004. Balance for the nine month period ended September 30, 2005 is mainly comprised of salaries, commission and consulting fees to salespersons and the president of $488,000 compared to $518,000 for the same period of fiscal 2004. Decrease in balance was mainly due to the decrease in salespersons from 8 as at September 30, 2004 to 5 as at September 30, 2005. The advertising and promotion expenses were decreased by $50,000 which was mainly due to the better control on the expenses by the Company.

General and administrative cost was $1,497,800 or 21.4% of revenues for the nine month ended September 30, 2005 compared to $1,314600 or 21.7% for fiscal 2004. The balance for the nine month period ended September 30, 2005 mainly is comprised of salaries and benefits to administrative staff of $353,800 compared to $391,900 for the nine month period ended September 30, 2004. The professional fees and investor relations expenses were $534,000 for the nine month period ended September 30, 2005 compared to $236,000 for the same period of fiscal 2004. The increase was mainly due to investor relations expenses for the fiscal 2005 and additional professional fees incurred for the registration statements and other corporate matters. There were no investor relations expenses in fiscal 2004. For the fiscal 2004, there were $256,000 professional fees and investment banking fees incurred related to the business acquisition and leverage buyout.

Operating Income/Loss: The Company has a lower gross margin of 30% for the nine month period ended September 30, 2005 compared to 32% for the same period ended September 30, 2004. Our losses were mainly due to the lower gross margin, large professional fees for the registration statements and the quarter report and investor relations expenses.

Interest and Other Expenses or income: Net interest and other income for the nine month period ended September 30, 2005 was $1,674,500 or 23.9% of revenues compared to $23,600 or 1% of the revenues for the same period of fiscal 2004. The balance for the current period is primarily comprised of the amortization of deferred charges amounting to $351,800. In addition, total interest on convertible term notes and other notes payable was $318,000 for the nine month period ended September 30, 2005 and there was no such interest for the same period of fiscal year 2004. In addition, there were penalties in the amount of $137,000 to Laurus related to the Company for failure of the Company to cause its registration statement registering the shares to be declared effective by the SEC on the required date. Laurus waived any liquated damages due and payable to Laurus and the Company issued 313,000 warrants to Laurus. The warrants were recorded at fair value by using the Black-Scholes option pricing model. (see Note 8 and Note 11). The above expenses were offset by the income from the movement of derivative financial instruments of $2,483,000.

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Income taxes: No income tax provision for the period ended September 30, 2005 which was mainly due to the Companys losses for the period. All prior taxes have already been accounted for in the income tax recoverable and therefore, there is no additional provision for income taxes recoverable and deferred tax asset.
Net Income/Loss: Net income for the nine month period ended September 30, 2005 was $615,300 compared to net loss of $1,022,000 for the nine month period ended September 30, 2004. The income was mainly due to remeasurement of derivative instruments of $2,483,00 for the nine month ended September 30, 2005 and there is no such income for the same period of fiscal 2004 The increase in income was offset by the amortization of deferred charges amounted to $351,700 and there is no such expenses for the same period of fiscal year 2004. In addition, there was professional and investor relations expenses incurred due to public company expenses and also the additional interest expenses on long term debts. Also, the gross margin decreased by 2% in 2005 compared to the same period ended of fiscal 2004.

Liquidity and Capital Resources

Since our inception, we have financed our operations through bank debt, loans and equity from our principals, loans from third parties and funds generated by our business. At September 30, 2005, we had $857,500 in cash. We believe that cash from operations and our credit facilities with Laurus Master Funds, Ltd. will continue to be adequate to satisfy the ongoing working capital needs of the Company. The balance available under credit facilities was $159,400 as at September 30, 2005. During fiscal year 2005, our primary objectives in managing liquidity and cash flows will be to ensure financial flexibility to support growth and entry into new markets and improve inventory management and to accelerate the collection of accounts receivable.

Net Cash Used in Operating Activities. Net cash used in operating activities amounted to $928,000 for the nine month ended September 30, 2005. The changes in operating assets and liabilities resulted in net cash provided of $185,000, which included a $256,200 increase in accounts receivable, a $163,800 decrease in inventory, a $2,000 decrease in prepaid expenses, a $388,900 increase in accounts payable, a $1,000 decrease in income taxes recoverable and a $113,000 decrease in deferred revenue.

Compared the balance sheet as at September 30, 2005 to December 31, 2004

Accounts Receivable

Our accounts receivable increased by approximately $256,000 compared to the balance as at December 31, 2004 which was mainly due to the increase in revenue in the nine month period ended September 30, 2005 and more government related jobs in the first and third quarters, which have a longer payment cycle than the non-government jobs. Approximately 52% of the accounts receivable outstanding at September 30, 2005 were less than 90 days old.

Inventory

Inventory on hand at September 30, 2005 decreased $164,000 compared to the balance as at December 31, 2004. The level of inventory remains consistent with the balance as December 31, 2004 which was mainly due to the improvement of inventory control and keeping minimum levels of inventory.

Accounts Payable and Accrued Liabilities

Accounts payable increased approximately by $389,000 compared to the balance as at December 31, 2004 which was mainly due to the increase in purchases of material, in the last nine month and the timing of payments to our suppliers. Total trade payable as at September 30, 2005 increased by approximately $400,000 compared to the balance as at December 31, 2004 and the increase was offset by the decrease in accrued liabilities by approximately $50,000.

Deferred Revenue

Deferred revenue decreased by $113,000 at September 30, 2005 compared to the balance as at December 31, 2004. This increase was mainly due to the timing of payments by our customers. Deferred revenue primarily relates to payments associated with the contracts where revenue is recognized on a percentage of completion basis. (See summary of accounting policy in our condensed consolidated financial statements).

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Incomes Taxes Recoverable
The income taxes recoverable were mainly due to the expected refund from losses carried back to prior years.

Net Cash Used in Investing Activities. Net cash used in investing activities was $130,000 for the nine month ended September 30, 2005 compared to $1,800,000 for the nine month ended September 30, 2004. The balance for the period ended September 30, 2004 was mainly due to the note receivable to dataBahn of $125,000 for the current period. Last year balance was mainly due to the acquisition of
A.C. Technical Systems Ltd. for cash payment of $1,800,000.

Net Cash Provided From Financing Activities. Net cash provided from financing activities was $1,663,000 for the nine month ended September 30, 200 compared to net cash provided of $4,013,000 for the nine month period ended September 30, 2004. The balance for the nine months period ended September 30, 2004 was mainly due to net cash received from the convertible term note financed from Laurus.

We plan to adopt an incentive stock option plan after our registration statement registering the shares issued to Laurus is declared effective by the SEC. The terms of the inventive stock option plan are not yet known.

Our capital requirements have grown since our inception with the growth of our operations and staffing. We expect our capital requirements to continue to increase in the future as we seek to expand our operations. On September 30, 2004, we obtained additional funding through a series of agreements entered with Laurus (see details on Note 1 and 8 in the condensed consolidated financial statements). If Laurus converts the term note and/or the revolving notes into shares of the Companys common stock, the Company may avoid or reduce any cash payment required for principal and interest payable. As a result, it will improve our cash flow. However, such conversion by Laurus will dilute the existing shareholders.

Recent Accounting Pronouncements -

In November 2004, the Financial Accounting Standards Board issued SFAS No. 151, Inventory Costs-an Amendment of ARB No. 43, Chapter 4. The standard adopts the view related to inventories that abnormal amounts of idle capacity and spoilage costs should be excluded from the cost of inventory and expensed when incurred. Additionally, the meaning of the term normal capacity was clarified. It should be effective for fiscal years beginning after June 15, 2005. Based on managements evaluation, the adoption is not expected to have a material effect on the consolidated financial statements.

In December 2004, the Financial Accounting Standards Board issued FASB Statement No. 123R (Revised), Share-Based Payment which is a revision of FASB Statement No. 123, Accounting for Stock-Based Compensation. Statement No. 123(R ) supersedes APB Opinion No. 25, Accounting for Stock Issued to Employees, and amends FASB Statement No. 95, Statement of Cash Flows. Statement No. 123(R ) requires all share-based payments to employees, including grants of employee stock options, to be recognized in the financial statements based on their fair values and, for small business issuers, is effective at the beginning of the first interim or annual reporting period beginning after December 15, 2005. Based on the managements evaluation of SFAS No. 123R, the adoption is not expected to have a material effect on the consolidated financial statements.

In September 2004, the Financial Accounting Standards Board issued EITF 04-8, The Effect of Contingently Convertible Instruments on Diluted Earnings per Share. This Issue addresses when contingently convertible instruments should be included in diluted earnings per share. The Task Force reached a consensus that contingently convertible instruments should be included in diluted earnings per share (if dilutive) regardless of whether the market price trigger has been met. The Task Force also agreed that the consensus should be applied to instruments that have multiple contingencies if one of the contingencies is a market price trigger and the instrument is convertible or settleable in shares based on meeting a market condition. Based on managements evaluation of EITF 04-8, the adoption did not have a significant effect on the consolidated financial statements.

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